How am I going to be taxed in Cyprus?

Individuals are taxed on the following scales:

Chargeable
Income
EUR
Rate of Tax
%
Cumulative
Tax
EUR
Up to – 19.500 Nil Nil
19.501 – 28.000 20 1.700
28.001 – 36.300 25 2.075
36.301 – 60.000 30 7.110
Over 60.001 35

You could work as self-employed or an employee of a company. You could register a trade name and do business / invoice using your trade name. In this case however you would be taxed as an individual.

Individuals must submit Audited Accounts if their Gross Turnover is more than 70,000 euros in a Tax Year.

Otherwise Individuals still must maintain proper books and records, register for VAT if appropriate and issue legal invoices.

Remuneration derived from the rendering of salaried services outside Cyprus to a non-resident employer or to a permanent establishment situated outside Cyprus of a resident employer for a total aggregate period in the year of assessment of more than 90 days will be exempted from tax.

VAT is currently 19% and the VAT threshold is 15,600euros (12 months). However as soon as a business will issue an invoice to other EU countries then it must register for VAT purposes and submit the VIES every month. The benefit is that intracommunity services to EU vat registered businesses are without vat.

Companies in Cyprus pay PAYE on employees’ salaries. The deduction is done every month and paid by the next month. The social insurance contributions in Cyprus are 7,8% for the employee and 11,5% for the employer (total 19,3%)

Self-employed persons pay 14,6% social insurance on an amount that is being determined by their professions category of income or according to their annual declaration of actual income based on the last years taxable profit.

You must declare your worldwide income (Salaries and dividends etc) to the country in which you are officially tax resident.

Sometimes you could still be a tax resident in a country even though you do no longer live there permanently as long as you continue to work there for a certain period of time and visit the country for certain days per year according to the rules of that country.

To stop paying taxes elsewhere but Cyprus you must become a Cyprus Tax Resident and follow the rules mentioned above.

To become a Cyprus Tax Resident is a process that includes a number of questionnaires and verifications such as that you work and live in Cyprus from now on. You can make this declaration after some time spend in Cyprus, however you can setup your company and business without a problem until then.

However, for non-Cyprus residents OR non domiciled Cypriots (Foreigners who decide to move their personal tax residency in Cyprus, will automatically be considered as non-domiciled in Cyprus for a maximum of 17 years) are completely exempt from Special Defence Contribution tax (“SDC”). SDC generally applies on dividends and interest.

Another benefit is if you are employed in Cyprus by your company, you are allowed the following tax benefits:

For salaries below 100,000euros per year 20% tax deduction for 3 years (max benefit 8,550euros) until 2020.

For salaries of 100,000euros and above 50% tax deduction (available for 10 years).

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